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The Next Shoe to Drop: Pension Payments
George
Washington's Blog
Thursday, Dec 11, 2008
Mish has been warning about underfunded pension funds for years
(see this
and this).
I have to admit, though, I didn't pay much attention until the
meaning of underfunded pensions hit me today.
Specifically, I stumbled into this March 2008 prediction from
Leap/2020
(which has been right in many, although not all, predictions so
far):
Meanwhile, dozens of millions of newly retired "baby-boomers"
are beginning to call upon payback from these [pension] funds.
According to our team, it is
likely that, by the end of 2008, this crisis will be the dominant
aspect of the current global financial crisis. It will also provoke
a social crisis affecting pensioners, in particular in the US
(45 percent of pension funds’ total assets in the world),
in Japan (18 percent) and in various European countries depending
heavily on capital-based pension systems, i.e. UK (7 percent),
Sweden (1 percent), Denmark (1 percent) and above all, in the
Eurozone, the Netherlands (6 percent of pension funds’ total
assets in the world). Canada too, which represents 5 percent of
these assets, will be affected (3). In the rest of the world,
only accounting for 11 percent of these assets, pensioners will
not be affected so much.
According to this list, pensioners
in the US, Japan, UK, Netherlands and Canada, who counted on regular
capital-based pension revenues, will find themselves in a difficult
situation. At the end of 2008, as the global systemic crisis unfolds
in the economic and financial sphere, LEAP/E2020 estimates that
half of those pension funds will be confronted to a drastic decrease
in their revenues and to a shrinking value of their capital.
(ARTICLE CONTINUES BELOW)
What does this mean?
Well, millions of retirees in the U.S., UK, Japan, Canada and
the Netherlands are about to get their pension benefit checks
slashed.
Which means that they'll have less to spend.
Which means that there will be another major hit to the economies
of those countries.
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INFOWARS:
BECAUSE THERE'S A WAR ON FOR YOUR MIND
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